What actually determines how much you can borrow
Your income. The starting point is gross income: base salary, overtime, allowances, rental income and government payments. Self-employed applicants are typically assessed on a two-year average from their tax returns, and variable income like bonuses, commissions or casual wages usually gets discounted with a shading factor rather than counted in full.
Your living expenses. Most lenders use the Household Expenditure Measure (HEM) as a floor benchmark, even if your actual spending is leaner than that. HEM is based on research into typical Australian household spending, segmented by household size, income level and postcode. If your actual expenses are higher than HEM, the lender uses your real figures instead. Bank statements are typically reviewed over six months to assess your actual spending pattern.
Your existing debts and commitments. Every financial commitment reduces what you can borrow: car loans, personal loans, credit card limits, buy now pay later accounts, HECS-HELP debt, and any existing mortgages. Credit cards are assessed at their full limit, not the balance you're carrying, so a $20,000 limit can reduce your borrowing capacity by as much as $80,000 to $100,000, even if you pay it off in full every month.
Your credit history. A strong credit history improves both your borrowing capacity and the rate you're offered. Late payments, defaults and a string of recent credit enquiries all work against you. Equifax scores generally fall into bands: below 460 is below average, 460 to 660 average, 661 to 734 good, 735 to 852 very good, and 853 to 1200 excellent.
Your deposit and LVR. A larger deposit, meaning a lower loan-to-value ratio, generally means better terms and higher borrowing capacity. Most lenders prefer an LVR of 80% or below, and deposits under 20% typically trigger Lenders Mortgage Insurance.
Dependants in your household. More dependants means higher assumed living costs, which reduces the income available for loan repayments in a lender's assessment.
A rough guide to borrowing capacity by income
As a general indication only, based on a single applicant with no existing debts, standard living expenses, and a 6.5% assessed rate including the 3% stress buffer (April 2026 figures): $50,000 income might support roughly $230,000 in borrowing, $70,000 around $330,000, $90,000 around $430,000, $120,000 around $580,000, $150,000 around $730,000, $180,000 around $870,000, and $200,000 around $970,000 or more. These are estimates only, your actual figure depends heavily on your expenses, debts and the specific lender's policies.
For a household perspective: $80,000 in single income with no dependants might support $320,000 to $480,000 in borrowing, with monthly repayments around $1,700 to $2,550. $100,000 in typical single-household income might support $400,000 to $600,000, with repayments around $2,100 to $3,200. $150,000 in combined dual income might support $600,000 to $900,000, with repayments around $3,200 to $4,800. And $200,000 in strong dual income might support $800,000 to $1,200,000, with repayments around $4,250 to $6,400. These repayment figures assume a 6.5% variable rate over a 30-year term and are illustrative only.
The interest rate stress test
APRA requires lenders to assess your ability to service a loan at your actual rate plus a 3% buffer, so a 6.5% rate is effectively assessed as if it were 9.5%. It exists to protect borrowers from taking on debt that becomes unserviceable if rates rise during a normal cycle, and its practical effect is that your maximum loan is almost always lower than what a simple repayments calculator at today's rate would suggest.
How a mortgage broker can help maximise what you can borrow
Different lenders apply genuinely different policies on income shading, expense assessment, and how they treat your existing liabilities, which means the same income and debt profile can produce meaningfully different borrowing outcomes depending on who assesses it. Brokers assess your position across multiple lenders at once rather than through a single institution's lens.
Stanford Financial's approach includes advising on reducing or closing unused credit card limits before you apply, identifying which lenders treat your specific income type most favourably, helping self-employed borrowers present their income clearly and compliantly, clarifying how HECS debt or other commitments affect your position, and identifying whether you qualify for professional package products. With access to more than 50 lenders, we can generally find a suitable product and lender for your goals without being tied to a single institution's policies.
Common mistakes that reduce your borrowing capacity
- Too many credit cards, or limits that are too high. A zero balance doesn't eliminate the impact, since lenders assess the full limit as a potential liability regardless of what you actually owe.
- Buy now pay later accounts. Services like Afterpay and Zip are treated as consumer debts and included in your liability assessment regardless of the outstanding balance.
- Irregular or undocumented income. Income without a clear payslip or tax return trail is harder for lenders to verify, and can result in a lower assessed figure than your real earnings. This is particularly relevant for self-employed borrowers and contractors.
- Applying with multiple lenders at once. Each credit enquiry is recorded on your file, and several in a short period signal financial stress and reduce your score. A broker assessment avoids generating multiple enquiries upfront.
- Not accounting for all your income. Borrowers often forget rental income, government payments, overtime or other legitimate earnings when estimating their own position, and a complete picture can meaningfully increase what you can borrow.
How debt stacks up against your capacity
Based on a $120,000 income with standard living expenses (April 2026 figures), starting borrowing capacity with no debts sits above $580,000. Add a $10,000 credit card limit, and capacity drops by around $60,000 to roughly $520,000. Add a car loan at $500 a month, and it drops a further $60,000 to around $460,000. Add a HECS-HELP balance of $40,000, and it drops around $70,000 to roughly $390,000. Add a personal loan at $300 a month, and it drops a further $60,000 to around $330,000. Add a second credit card with a $15,000 limit, and it drops another $60,000 to around $270,000. Altogether, that combination of everyday debts reduces borrowing capacity by roughly $310,000 from the starting point, which gives some sense of how much even modest, well-managed debt can affect what you can borrow.
Steps to take before you apply
Review and reduce your credit card limits, and cancel any cards you don't need. Close buy now pay later accounts you're no longer using. Avoid taking on new debt in the six months before applying. Work with a broker to avoid generating multiple credit enquiries. Build a visible history of genuine savings that demonstrates financial discipline. Gather your documentation early, payslips, tax returns, bank statements and identification. And check your credit report ahead of time, so you can address any errors or defaults before a lender sees them.
How to actively increase your borrowing capacity
Based on a $120,000 income, single applicant (April 2026 indicative figures): closing a $10,000 credit card typically adds $50,000 to $60,000 in capacity. Paying off a car loan at $500 a month typically adds $55,000 to $65,000. Adding a co-borrower earning $80,000 typically adds $250,000 to $300,000, by far the biggest lever available. Accurately reducing your declared expenses (where genuinely applicable) can add $30,000 to $50,000. Simply using a different lender, given how much policy varies, can add $40,000 to $80,000. A voluntary repayment against a $40,000 HECS balance can add $60,000 to $80,000. And closing BNPL accounts can add $15,000 to $25,000.
It's worth noting just how much lender choice alone matters here: different lenders can produce borrowing estimates that vary by $50,000 to $100,000 on the exact same income and debt profile. Comparing across more than 50 lenders, as we do, is how you find the assessment model that actually works in your favour.
Frequently asked questions
How much can I borrow for a home loan? It depends on your income, expenses, existing debts and credit history. Stanford Financial evaluates your full financial situation to determine the maximum amount that aligns with your genuine capacity to repay.
Can I borrow more with a co-borrower? Yes. A co-borrower's income is included and increases your combined capacity, though their debts, credit history and expenses are factored in too. Joint applications typically produce meaningfully higher limits than solo ones.
Does pre-approval affect my credit score? A formal pre-approval involves a credit enquiry, which can cause a small, temporary dip for an otherwise healthy credit profile. Conditional or indicative assessments generally don't require a formal enquiry, letting you explore your options without touching your credit file until you're ready to proceed.
Does my HECS-HELP debt affect how much I can borrow? Yes. HECS-HELP is treated as a committed expense, since repayments are automatically deducted from your income above the relevant threshold, reducing your net assessable income. A significant HECS balance, particularly common in professions like medicine, dentistry and pharmacy, can noticeably affect your borrowing capacity.
How quickly can I increase my borrowing capacity? Some changes are almost immediate, reducing credit card limits and closing BNPL accounts can improve your position within weeks. Building a savings history typically takes months. Addressing credit file issues can take longer, but often produces a significant improvement once resolved.
What if I'm building rather than buying an existing property? The process differs, since funds are released in stages as construction progresses rather than as a single upfront amount. It's worth discussing construction loan specifics separately with your broker.
Finding out what you can actually borrow
Understanding your borrowing capacity is the first and most important step in your home buying journey. Stanford Financial works with more than 60 lenders across Australia, at no cost to you, whether you're a first home buyer, an investor, or simply working out where you stand.
Call us on 0483 980 002 or book a free assessment online.
